Elon Musk said he believed he had enough financial backing to take Tesla private, from Saudi Arabia’s sovereign wealth fund and his own stake in SpaceX, as he testified in court in an investor lawsuit claiming his tweets about the matter cost him millions of dollars. . dollars.
On the second day of testimony in federal court in San Francisco, Musk said he believed the “deal was done” that Saudi Arabia’s Public Investment Fund would support efforts to take Tesla private for $420 per share, a premium of about 20 per share. cent at the time, though he admitted there was no contract and many details had not been worked out.
Musk said that PIF has “many multiples” of what is needed to take Tesla private, especially since it is not expected to buy the entire company, adding that its own shares in SpaceX, the rocket company, will be enough to make it happen. any deficiency. “It’s important for the jury to know,” he said.
The class action lawsuit was brought by investors who allege Musk artificially boosted Tesla’s stock price when he wrote on Twitter in August 2018 that he was considering acquiring the electric car maker for $420 per share and had “guaranteed funds” to do so. A deal never materialized. Shareholders said the shipment ultimately led to significant financial losses as the stock reacted.
Musk has denied the post, which caused Tesla’s share price to rise sharply and ended the day up 11 percent, based on conversations with PIF backers and what he considered a “handshake” agreement to take the company off the public market.
When pressed about the possible reaction to the tweet, Musk, looking solemn in a dark suit with a dark tie, told a packed courtroom that it was “hard to say” whether Tesla’s stock would go up or down because the market could act in “counter-intuitive ways.” “.
But he admits that the share price will rise. “I expect that there (will be) an increase in the share price – it seems. If you say that you are considering taking the company private or acquiring the company . . . there will be some premium. . . In this case, I am clear about the premium that will be made.
Musk has testified that the tweet was based on a “split-second decision” after he received word that the Financial Times was writing an article about the PIF acquiring a $2bn stake in Tesla. He described Monday as the “driving factor” behind the tweet.
The shareholders’ lawyers tried to describe the tweet as a non-serious proposal, and proposed a price of $420 based on a joke that his girlfriend at the time was funny – 420 is a common term for marijuana. Musk disagreed, saying he applied a 20 percent premium to the stock, then rounded it up a bit.
“There is some karma around 420, although I would question (whether) karma is good or bad, at this point,” he said.
The billionaire insisted that the tweet said he was “considering” taking Tesla private, and that it shouldn’t be taken as a definitive agreement.
Nicholas Porritt, a lawyer for shareholders, pointed out that Musk did not discuss the proposal before with Tesla’s board of directors. But the billionaire said it was inappropriate: “I, as a bidder, am not allowed to discuss in detail with the council because it is a partner. So, it would be collusion if I discuss in detail with the council.
Musk and Tesla have paid US regulators a total of $40 million over the tweet.